is a leading
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...
case on the principle that directors must avoid any possibility of a conflict of interest, particular relating to
corporate opportunities The ''corporate opportunity'' doctrine is the legal principle providing that directors, officers, and controlling shareholders of a corporation must not take for themselves any business opportunity that could benefit the corporation. The corporate ...
. It was not decided under, but is relevant to, section 175 of the
Companies Act 2006
The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law.
The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...
.
Facts
Bhullar Bros Ltd was owned by families of two brothers. Each side owned 50% of ordinary shares. The directors were Mr Mohan Bhullar, his son Tim, Mr Sohan Bhullar and his sons Inderjit and Jatinderjit. The company had a
grocery store at 44 Springwood Street,
Huddersfield
Huddersfield is a market town in the Kirklees district in West Yorkshire, England. It is the administrative centre and largest settlement in the Kirklees district. The town is in the foothills of the Pennines. The River Holme's confluence into ...
. It also owned an investment property called Springbank Works, Leeds Road, which was
lease
A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
d to a
bowling alley
A bowling alley (also known as a bowling center, bowling lounge, bowling arena, or historically bowling club) is a facility where the sport of bowling is played. It can be a dedicated facility or part of another, such as a clubhouse or dwelling ...
business called
UK Superbowl Ltd. In 1998 the families began to fall out. Mohan and Tim told the board they wished for the company to buy no further investment properties. Negotiations began to split up the company, but they were unsuccessful. In 1999, Inderjit went bowling at the UK Superbowl Ltd alley. He noticed that the carpark next door (called White Hall Mill) was on sale.
[nb UK Superbowl Ltd was also leasing the carpark property, but was not the owner.] He set up a company called Silvercrest Ltd (owned by him and Jatinderjit) and bought, but did not tell Bhullar Bros Ltd. But Mohan and Tim found out and brought an
unfair prejudice
Unfair prejudice in United Kingdom, company law is a statutory form of action that may be brought by aggrieved shareholders against their company. Under the Companies Act 2006 the relevant provision is s 994, the identical successor to s 459 Comp ...
claim (now s 994
Companies Act 2006
The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law.
The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...
) on the basis that Inderjit and Jatinderjit had breached their fiduciary duty of loyalty to the company.
Judgment
Jonathan Parker LJ held that there was a clear breach of the rule that directors must avoid a conflict of interest.
Brooke LJ and
Schiemann LJ concurred.
See also
*''
Keech v Sandford
is a foundational case, deriving from English trusts law, on the fiduciary duty of loyalty. It concerns the law of trusts and has affected much of the thinking on directors' duties in company law. It holds that a trustee owes a strict duty of ...
''
EWHC_Ch_J76*''Whelpdale_v_Cookson.html" ;"title="726
EWHC Ch J76*''Whelpdale v Cookson">726
EWHC Ch J76*''Whelpdale v Cookson'' (1747) 1 Ves Sen 9; 27 ER 856
*''Aberdeen Railway Co v Blaikie Brothers'' [1843–60] All ER Rep 252, self dealing case
*''Parker v McKenna'' (1874–75) LR 10 Ch App 96, per James LJ that the rule is necessary for "the safety of mankind"
*''Bray v Ford'' [1896] AC 44 at 51-52, per Lord Herschell, the no possibility of conflict rule is "based upon the consideration that, human nature being what it is, there is danger of the person holding a fiduciary position being swayed by interest rather than duty…."
*''
Regal (Hastings) Ltd v Gulliver
, is a leading case in UK company law regarding the rule against directors and officers from taking personal advantage of a corporate opportunity in violation of their duty of loyalty to the company. The Court held that a director is in breach ...
''
9672 AC 134n
*''
Boardman v Phipps
''Boardman v Phipps'' 966UKHL 2is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest.
Facts
Tom Boardman, Baron Boardman, Mr Tom Boardman was the solicitor of a family trust.See the cas ...
''
9672 AC 46
*''
Industrial Development Consultants v Cooley''
972
Year 972 ( CMLXXII) was a leap year starting on Monday (link will display the full calendar) of the Julian calendar.
Events
By place
Byzantine Empire
* Spring – Emperor John I Tzimiskes divides the Bulgarian territories, recent ...
1 WLR 443
*''
Canadian Aero Service Ltd. v. O'Malley'' (1973) 40 DLR (3d) 371
Notes
{{reflist, 2
References
*
External links
*Obituary
'Sohan Singh Bhullar Founder of thriving business and community leader'(9.9.2008) Huddersfield Daily Examiner
United Kingdom company case law
Court of Appeal (England and Wales) cases
2003 in case law
2003 in British law